LABOR

On Labor Day, a New Reality for the Unemployed

One of the largest—and certainly the most divisive—of all the pandemic-era relief programs ends today.

Almost 3 million people will lose their extra $300/week in benefits provided by the federal government. 25 states had already wound down the program over the summer, arguing it was keeping potential workers on the sidelines and fueling a historic labor shortage.

The backstory: In March 2020, as the US was shedding almost 1 million jobs per day, Congress authorized an extra $600/week in unemployment benefits on top of what states offered to keep jobless Americans afloat (the $600/week was later reduced to $300 in August 2020).

Around the same time, the government also expanded the number of workers eligible for unemployment insurance (UI) by including people like gig workers and the self-employed. That program, which comprised 40% of all UI claims during the pandemic, also expires today. 

In all, the US government has spent $680 billion on unemployment benefits since last March, the second-highest amount among Covid stimulus programs behind only the Paycheck Protection Program ($835 billion).

It’s split the US more than Laurel and Yanny

Critics of letting the extra benefits expire say it’s too early to rip out support for millions of Americans who are still without work because of the pandemic, especially as the Delta variant thwacks the labor market. The economy added only 235,000 jobs in August, much lower than expectations.

But many Republicans and business leaders say letting the extra benefits expire is long overdue. They’ve argued that the additional money disincentives people to look for work and has created an impossible situation for businesses desperate to hire.

While it’s still early to fully analyze the effects of the enhanced benefits on the labor market, preliminary studies show that removing extra UI has a modest, if any, impact on job growth. Economists point to other factors, such as health concerns over Covid and a lack of childcare options, as more meaningful drivers of the worker shortage. 

Looking ahead...the expiration of the unemployment programs could lead to $8 billion in reduced consumer spending in September and October, UMass economist Arindrajit Dube estimates. 

SNAPSHOT

Weekend Camera Roll

Bilal Guler/Anadolu Agency via Getty Images

Passengers board the first domestic flight from Kabul’s airport since the Taliban’s takeover of Afghanistan. Ariana Afghan Airlines has resumed some commercial flights between Kabul and regional cities, and a Taliban spokesperson said international flights will start "very soon."  

John Walton/PA Images via Getty Images

The Tokyo Paralympic Games closed this weekend with the US earning 37 gold medals, including in men’s wheelchair basketball and women’s sitting volleyball. China topped the gold medal leaderboard, followed by Great Britain and the US.

Anthony Pham/via Getty Images

The legend himself, Harry Styles, opened his North American tour at the MGM Grand Garden in Las Vegas Saturday night. All attendees for his performances are required to be vaccinated or present a negative Covid test to enter. 

DEFENSE

For the Defense Industry, 9/11 Changed Everything

Leading up to the anniversary of the September 11 attacks this Saturday, we’ll feature stories that explore the economic impact of 9/11, 20 years later.

Up first: The WSJ described the dramatic rise of the homeland security-industrial complex that sprang up following the attacks.

Did you know? Before September 11, 2001, the US had been cutting military spending. At the time of the attacks, spending on the military as a share of GDP had declined to less than one-third of what it was during the peak of the Vietnam War. 

But 9/11 “changed the dynamic,” retired Air Force Gen. Hawk Carlisle, now the CEO of a major defense trade group, told the WSJ. Here are a few stats that illustrate the change.

• Military spending doubled to $700 billion in the decade following 9/11, to about 20% of total government spending.
• In 2001, the Defense Department had about $181 billion in contract obligations to 46,000 companies. In 2011, it had $375 billion in obligations to 110,000+ contractors.
• Increased military spending by the government turned the Washington, DC, area into the country’s hottest regional economy from 2001–2011.

Bottom line: US military spending as a share of GDP has shrunk since peaking in 2011, but the booming homeland security industry it helped create remains a permanent fixture of the economy. 

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GRAB BAG

Key Performance Indicators

Stat: Nearly a third of Americans live in a county or state that has been declared a disaster area by FEMA this summer, according to a Washington Post analysis.

Quote: “I feel like for me, recently, when I win, I don’t feel happy, I feel more like a relief. And then when I lose, I feel very sad. I don’t think that’s normal.” 

Tennis star Naomi Osaka gave a devastating press conference after losing in an early round match at the US Open. The world’s highest-paid female athlete said she’s going to take a break from the sport for a while. 

Read: The viral social network that looks like nothing you’ve ever seen. (The Verge)

CALENDAR

The Week Ahead

9/11 anniversary: As we mentioned earlier, Saturday will mark 20 years since the terrorist attacks of September 11, 2001.

El Salvador dives into crypto: On Tuesday, El Salvador will become the first country to adopt bitcoin as legal tender. More on that wild move in tomorrow’s newsletter. 

Earnings: Lululemon and GameStop headline a quiet week for earnings.

NFL opener: The Dallas Cowboys and Tampa Bay Buccaneers kick off the NFL season Thursday night. It’s the first featuring an expanded 17-game regular season schedule, which means yesterday will be the last football-less Sunday until February 20, 2022.

Everything else: 

• Rosh Hashanah, the Jewish New Year, begins this evening.
• The FDA will decide by Thursday whether Juul’s devices and nicotine pods can stay on the market.
• Saturday, September 11, also marks 18 months since the WHO declared Covid-19 a global pandemic.

WHAT ELSE IS BREWING

• Lyft and Uber will pay the legal fees of their drivers who get sued under Texas’s new abortion law.
• Marvel’s Shang-Chi earned an estimated $71.4 million at the domestic box office this weekend, good for the second-best pandemic opening after Black Widow.
• The UAE is looking for $150 billion in foreign investment as it tries to position itself as a global finance hub.
• Next Digital, the Hong Kong media company owned by jailed pro-democracy activist Jimmy Lai, said it was liquidating due to China's recent crackdown.

BREW'S BETS

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Dive back into the week:

• Shallow dive: Tools for better thinking
• Medium dive: Shrinking US cities
• Deep dive: The unpleasant history of Google messaging apps
• Cannonball: David Sedaris on grieving 

GAMES

The Puzzle Section

Kriss Kross: Grab popcorn and a large soda before solving today's puzzle.

Sweet Tooth

Can you identify the following candy bars from their cross-sections?

Scandy Bars

ANSWER

1. Butterfinger
2. 100 Grand
3. Snickers
4. Baby Ruth
5. Rolo
6. Almond Joy

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including the possible loss of your entire investment. Please drink responsibly.